FCC Chairman questions AT&T’s merger math

Performing a few mental calculations during his keynote at CTIA Wireless on Tuesday, Federal Communications Commission Chairman Julius Genachowski quickly concluded that the same amount of mobile spectrum exists in the U.S. today as existed before the FCC slapped down AT&T’s merger with T-Mobile. Given that the sums are the same, where did this sudden capacity crisis come from that somehow forced AT&T to hike mobile data prices?

“Some have argued that transactions, let’s be frank — one transaction — is somehow causing a shortage and causing a price change,” Genachowski said, according to the Washington Post. “But the overall amount of spectrum hasn’t changed, except for the amount we’ve added to it.”

Ever since the merger died, AT&T has been battering regulators, trying to pin the blame on the Commission for its recent consumer data plan rate hike. As I have pointed out before, AT&T is simply scapegoating the FCC for it’s own decision to raise prices. It still has plenty of spectrum it can use to add capacity before it faces a mobile data crisis. And while it may have raised prices, it’s actually selling bigger buckets of data at lower rates, encouraging its customers to consume more, not less, bandwidth. But it’s good to see that Genachowski and the FCC are fighting back.

AT&T, however, is still sticking to its math, saying that the merger would have somehow magically created additional capacity for the wireless industry. “Basic economics, and the law of supply and demand, apply to the wireless industry as to all others,” Jim Cicconi, AT&T Senior EVP of External and Legislative Affairs, wrote on AT&T’s blog after the speech. “In the case of wireless, without additional capacity, which would have been created by our transaction, prices rise.”